Tuesday, January 10, 2012

Probably only telecom groupies realize the monumental efforts of the FCC over the past year to reform the $7 billion dollar Universal Service Fund (USF). The effort culminated in a voluminous order focused on the High Cost Fund that was adopted on November 18, 2011. And, while there will certainly be legal challenges to the USF order, it is no less an important step for the agency.

The FCC commissioners and staff should be proud of taking a stand and finally curtailing what has been one of the least efficient and certainly overly costly subsidy programs funded by taxpayers. The USF program has been a poster child for corporate welfare, and it has needed reform for decades.

On the other hand, the FCC now has the last piece of overall USF reform to finalize: the portion of the fund that supports qualified Low Income persons. And while I have been a vociferous supporter of reforming universal service for years, I hope that the Commission doesn't throw the baby out with the bathwater. While many have criticized the Low Income Fund for "waste, fraud and abuse" – indeed, I agree all government programs should constantly improve their efficiencies and implement procedures to prevent fraud – the industry has stepped forward with numerous solutions which already have solved most of these criticisms, and more reforms can be implemented.

But the bottom line is that low income Americans are still facing extremely high levels of unemployment and the longest recession since the Depression.

The low income fund is just that: a fund only for low income persons; only for the poorest of the poor.

In many ways, it is the part of the fund that most embodies what Congress intended by creating a fund that ensures all Americans have the opportunities available in a nationwide communications network. Congress indeed foresaw that communications would connect people to jobs, healthcare, schools, and, of course, their families. Today that connectivity should include broadband, and the Lifeline could again be the safety net to insure that no American – no matter how poor – is left behind in the Digital Age.

And here's an important point about the Lifeline program that should be emphasized: The fact that the program exists, as a means of targeting subsidies to those truly in need, makes it easier to argue convincingly that those parts of the overall USF program which distribute subsidies in a much more indiscriminate fashion, such as the high-cost program, should be subject to hard caps and gradual reductions.

In other words, the existence of the Lifeline program ought to be persuasive in arguing that subsidies that support service to the wealthy residents of Aspen and Jackson Hole should continue to be phased out.

My hope for the New Year is that the FCC recognizes the important – indeed, the critical – role that the Lifeline program plays in helping to ensure communications access for the truly poor. Rather than capping the low income program, we should be ensuring that those in need have access to this vital lifeline.